The Federal Reserve's balance sheet has swollen to more than $3.5 trillion since it began buying Treasuries and mortgage-backed securities in an effort to achieve its inflation goal and promote maximum employment.
U.S. unemployment stands at 7.4%, short of the Fed's goal of 6.5%. Annual inflation growth of 1.3% is below the Fed's stated 2% long-run target.
Federal Reserve Bank of San Francisco, “How Stimulatory Are Large-Scale Asset Purchases?”
The authors estimate large-scale asset purchases have a 0.13 percentage point impact on annual GDP growth, about half as much an impact as an interest-rate cut of 0.25 percentage points. They argue the effectiveness of such purchases depends on interest-rate expectations and, therefore, communication about the timing of rate increases is more important than when asset purchases will taper off.